Potential Impact of Changes in Risk Assessment to Address Wicked Problems: A Case Study of British Petroleum’s Assessment Strategies

Abstract

In the last decade, in lieu of many financial and environmental problems, the confidence in a traditional risk management strategy has fallen. Due to issues facing the sustainability of natural resources and globalization of the oil and gas industry, problems have become too complex to solve with traditional risk management strategies. The complexities of these problems have resulted in a characterization of the problem as “wicked problems.” Wicked problems are those that arise that are unstructured, irregular, and adaptive. In order to deal with wicked problems, different risk analysis strategies have been developed. These strategies have tried to create a beneficial form of risk analysis and management that will be more productive when dealing with wicked problems. Therefore, it should be of benefit to analyze whether broadened risk assessment and management principles for wicked problems are more environmentally sound and economically effective.

Using BP as a case study, this thesis hypothesizes that the execution of broadened risk assessment and management strategies will be more effective and efficient environmentally and economically.

This study examines the environmental and economic efficiency of British Petroleum (BP) in order to determine if the introduction of a broadened risk assessment strategy was beneficial. Emissions data were compiled from reported emissions records on the Environmental Protection Agency’s (EPA) greenhouse gas (GHG) data website from the years 2010-2012. Economic data were gathered through BP’s annual reports from the years 2008-2013. The data were compared through a series of environmental and economic analyses in order to determine the impact of a broadened risk assessment: The environmental data were assessed by analyzing the emissions levels and scaling the emissions by output of the company. The economic data were evaluated through two average product analyses and a risk savings analysis. The results showed an overall improvement in economic efficiency, and no environmental efficiency improvement after the introduction of a broadened risk assessment strategy.